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Sensitivity of fiscal-policy effects to policy coordination and business cycle conditions

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  • Viren, Matti

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    (Bank of Finland Research)

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    Abstract

    This paper deals with the problems of assessing the effects of fiscal policy in the European Monetary Union. Here, we face wide cross-country differences in key fiscal parameters, some of which may also be vary over time (business cycle). Moreover, these effects may also depend on trade spillover effects and thus on the extent of policy coordination. Our empirical analyses make use of data for 15 EU countries, mainly for the period 1970-2011. The results clearly indicate that fiscal multipliers are not constant across countries and time, being much larger during economic recessions. By contrast, the policy coordination-effects appear to be more homogenous, although it turns out that small countries may benefit more from coordination.

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    File URL: http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1311.pdf
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    Bibliographic Info

    Paper provided by Bank of Finland in its series Research Discussion Papers with number 11/2013.

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    Length: 21 pages
    Date of creation: 24 Jun 2013
    Date of revision:
    Publication status: Forthcoming as Viren, Matti, 'Sensitivity of fiscal-policy effects to policy coordination and business cycle conditions' in International Economics and Economic Policy , 2013, pages 1-15.
    Handle: RePEc:hhs:bofrdp:2013_011

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    Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
    Web page: http://www.suomenpankki.fi/en/
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    Keywords: fiscal policy; policy coordination; government deficit; EMU;

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    20. repec:hrv:faseco:3353756 is not listed on IDEAS
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